3 Dividend Stocks That Will Hold Up No Matter the Market Conditions

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The stock market appears headed for a bumpy start to 2022. Growth stocks have been hammered by rising yields and the Federal Reserve’s hawkish comments. When the market corrects, there are still safe plays that have been through the worst and still continue to reward long-term investors.

Walmart

Walmart (NYSE:WMT) is the ultimate “sleep well at night” stock. During March 2020, while the market was crashing, Walmart dipped far less and recovered much faster than the market overall, as shown below.

WMT Total Return Level data by YCharts

And investors can rest easy with Walmart’s steady and increasing dividend. Walmart has grown its dividend for 48 consecutive years. This means that it was raised each year through the 1987 Black Monday crash, the dot-com bubble bursting in 2000, the 2008 financial crisis, and during a worldwide pandemic. The stock currently yields 1.55% and has a payout ratio of 77%. The payout ratio is high; however, investors need not be concerned. Walmart’s results are as consistent as ever. 

Image source: Getty Images.

Walmart’s revenue for the nine months ended Oct. 31, 2021, came in at $420 billion. This is an increase of 3% over the same period in 2020. Over this time, the operating margin is 4.8% for 2021 and 4.2% for 2020. Over the years, Walmart has been remarkably consistent through good times and bad, and this is likely to continue to benefit long-term investors.

Target

Target (NYSE:TGT) has increased its dividend for 50 straight years, an even longer streak than Walmart. Target also tends to increase the dividend at a faster rate. The current quarterly payout of $0.90 is 32.4% higher than the previous quarterly dividend. In addition, the payout ratio is only 21.6%, making the dividend incredibly safe. Target also uses excess cash to make significant share repurchases. For the nine months ended Oct. 30, 2021, Target repurchased $4.9 billion in common stock, or more than 4% of the current market cap. Share buybacks are a tax-deferred return of capital to shareholders that support the share price and increase the earnings per share. 

Target has successfully withstood the onslaught from e-commerce and even fought its way to profitability during the worst of the pandemic. For the fiscal 2020 year, Target earned $8.72 per share, well above the $6.42 earned per share in 2019. For the first three fiscal quarters of 2021, Target earned $10.87 per diluted share. The company has increased revenue consistently since 2017, and its omnichannel efforts are paying off big for shareholders. 

TGT data by YCharts

Long-term investors can rest easy holding Target stock, even when the market is rattled.

Vici Properties

Vici Properties (NYSE:VICI) may not seem to match the other companies on this list. After all, it has only existed since 2017. However, this stock has survived in the face of the worst-case scenario. During the spring of 2020, the Las Vegas Strip was completely shut down. Casinos around the country were closed or severely restricted. And this gaming real estate investment trust (REIT) was thought to be in big trouble. The stock price crumbled, but the enterprise came through unscathed, and the stock soon made new highs.

The casino operators suffered tremendous losses in revenue. However, Vici still collected rent. In fact, Vici’s revenue actually increased during this period. 

VICI Revenue (Quarterly) data by YCharts

Because of this, Vici raised its dividend in the third quarter of 2020 just as it did in Q3 of 2019 and just recently in 2021. Vici has increased the dividend each year in its short existence and now pays $0.36 quarterly, a yield of 4.8%. 

Vici will soon expand its reach with the acquisition of MGM Growth Properties. This acquisition is expected to close in the first half of 2022 and be immediately accretive to adjusted funds from operations per share. Even better, Vici offers investors a hedge against inflation. According to the company, 97% of its contractual rent is subject to escalators based on the consumer price index. That’s right. When prices rise, so will the rent. The casinos also have very long leases at an average of 43.4 years. It is a safe wager that if Vici can thrive in the worst pandemic conditions, it can continue to deliver for long-term investors into the future. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.